Company car tax brackets 2022/2023: everything you need to know Car News

By taking the P11D value of your car, multiplying it by its BIK rate and multiplying the resulting figure by your tax bracket – for example £20,000 x 25% x 20% – you will get your annual BIK tax charge, which in this case is £1000.

Calculation of BIK diesel car prices

From being the darling of the environmental lobby, diesel cars are now widely frowned upon, with the result that emissions testing has become more difficult for them. The latest – mandatory on all new diesels sold from January 2021 – is called Real Driving Emissions Step 2 (RDE2).

Diesels registered before this date that are not RDE2 compliant (some achieved RDE2 compliance early, so check with your supplier) incur a 4% surcharge on their published BIK rate, up to 37%. Remember that if you are considering a used diesel as a company car. To be clear, all new diesels are RDE2 compliant, which means the 4% surcharge does not apply.

Diesel-electric hybrids are classed as alternative fuel vehicles, so avoid a surcharge whether or not they are RDE2 compliant.

Calculation of the BIK rate on electric cars

The absence of CO2 emissions ensures that electric cars enjoy the lowest BIK rate. In 2020/21 it was actually 0%; but in 2021/22 it has increased to 1%; and from 2022/23 it will be 2% until the end of the 2024/25 tax year. Either way, EV drivers pay far less company vehicle tax than anyone else.

Calculation of the BIK rate on hybrid and plug-in hybrid cars

Due to their low CO2 emissions, hybrid and plug-in hybrid (PHEV) cars enjoy the lowest BIK tariffs. However, as their emissions are tied to the fact that they can only travel on battery power, their BIK rates are calculated using a combination of CO2 emissions and official electric range.

There are five BIK tariff bands for hybrids. Cars with an electric-only range of over 130 miles attract a 2% rate in the 2022/23 tax year (although no such hybrids exist yet). At the other extreme, those with an electric range of less than 30 miles (a lot of them) are in the 14% band.